In this article I discuss the Indian outsourcing phenomena and ask the question now what? Using data from the Euro-India project I demonstrate that a small but significant part of the Indian IT entities are moving beyond outsourcing, to co-creation where Innovation and the desire to create new markets is the key driver. This does not imply that outsourcing will disappear but it does mean that firms will engage in globalization using innovative mix of business models and technical platforms. We discuss the implication of this slow transformation to co-creation of innovation for the global outsourcing industry. The key thesis of this paper is to discuss co-creation as a form of innovation and how such a form of innovation is likely to bring Indian companies rich dividends.